Nigeria’s Vice President Yemi Osinbajo on Monday spoke at a summit on Legislative Framework for Economic Recovery and Sustainable Development organised by the House of Representatives ad-hoc committee on economic recession which held at the International Conference Centre.

We noted some takeaways from his speech.

3 reasons why Nigeria got into a recession:

Over dependence on oil: “One: we were running an unstable economic structure. Oil alone contributed 70% of budgetary revenues and 90%, perhaps more than that, of our foreign exchange revenues.

“Up to 50-53% of the non-oil sector was dependent on the oil sector. Consequently, the fortunes of up to 60% of the Nigerian economy, rested on this volatile sector. This shaky foundation was masked in the past by high oil prices, but as soon as oil prices fell, the weakness showed.”

Consumption Driven Economy and lack of savings: “The second weakness in our economic structure is that it had mainly been consumption driven with a high propensity to import. Worse still, we were importing food, food that we could grow. Our unsustainable food importation bill at some point, was over N1trilion, it was particularly damning for the economy as foreign exchange revenues dried up.

“I think Dr. Teriba so ably stated that, we could have survived if we had savings. But we had no savings only debt. As economists would say, and as Dr. Teriba had said, we did not have the fiscal buffers to enable a counter-cyclical approach. In other words, we lacked the savings to see us through the lean times. Why? Why did we lack savings, when so much money was being made? This is the elephant in the room.”

Unbridled corruption and waste: “Another reason for the recession is corruption! Unbridled corruption and waste. I think it is important for us to emphasize that, so that we do not think that the recession was just something that occurred in a cyclical fashion – just another economic occurrence. No! It was not another economic occurrence, it was unbridled corruption on a scale that was unprecedented anywhere in the world, is what we experienced in Nigeria. It is important that we emphasize it so we don’t walk this way again.

“The figures speak for themselves. Between 2013 and 2015 with oil prices averaging up to $110 per barrel, sometimes going to as high as $150, the government of the day somehow contrived to increase national debt from N7.9 trillion to N12.1 trillion while reducing external reserves from $45 billion to $28 billion as of May 2015.

“Of course, we all know that there was very little by the way of investment in infrastructure and capital projects. In fact in 2015, capital spend was less than 11%. So there was very little to show for where this money went.”I don’t want to keep repeating some of the incredible things that happened, a few weeks before the last elections; how large sums of money, a 100billion in cash ostensibly for security. Another $289million in cash was paid out in the same period. No country can survive that kind of unbridled waste and corruption. We must never forget, that corruption is perhaps, the most outrageous cause of our economic decline.”

Two factors that deepened the recession:

Budget Approval Cycle: “The truth is that no developing economy can afford the luxury of prolonged executive/legislative wrangling over the budget. Developed economies with strong and independent private sectors may be able to cope, but Nigeria simply cannot.

“Budgetary delay in a situation of national economic emergency, and the hardship encountered by so many, is simply wrong and unacceptable. Neither the executive nor the legislature can excuse itself. It is wrong for us to hold up the budget for that long. The delays of course, will ensure that money will not flow into the economy, and that capital projects will not be done.”

Procurement Delays: “If the budget process takes up to 5 months of the financial year and procurement is another 3months we have already ensured that the economy will be at a standstill for most of the year.”

The Solution: Osinbajo said leadership must tackle the “weak economic foundations” of the country with a sense of urgency and long-term focus. He said, “this found expression is in the Economic Recovery and Growth Plan of Government.”

Highlights include:

New Niger Delta Vision: “The recovery intended in the Plan was truly to take the economy out of recession, but in addition, it was to stem the slide in growth that occurred since 2014. We accordingly prioritized, actions to restore oil production at home through a New Vision for the Niger Delta, while working with our international partners to stabilize oil prices.

“The results are clear, with oil production now at 2million barrels per day (including condensates which are not part of the OPEC quota) and our external reserves now stand at about $34billion.

Meeting Government Obligations: “A second plank of immediate actions taken was ensuring that consumption and investment did not contract any further. The Federal Government did paid its own salary obligations and extended support to the States to pay the backlog of salaries.”